The percentage of completion method is a fundamental accounting approach in the construction industry, used to recognize revenue and expenses in relation to the completed portion of a project. This guide explores the criteria, benefits, and challenges of this method and how Certified Public Accountants (CPAs) can assist in its effective implementation.


In construction accounting, accurately recognizing revenue and expenses is crucial due to the long-term nature of projects. Therefore, it’s essential to match revenues with corresponding costs. Furthermore, precise accounting ensures financial stability and project viability over time. The percentage of completion method addresses this need by allowing companies to report part of the income and expenses based on the project’s progress. This approach provides a more accurate financial picture of ongoing projects, aiding in better financial management and decision-making.

percentage of completion method

The Percentage of Completion Method Explained

1. Definition and Criteria

2. Calculating Percentage of Completion

3. Revenue Recognition

4. Benefits of This Method

5. Challenges and Considerations

How CPAs Can Help Implement the Percentage of Completion Method

1. Setting Up the Accounting System

2. Training and Support

3. Ongoing Monitoring and Adjustments

4. Financial Analysis and Reporting

5. Compliance and Audit Support


The percentage of completion method is an essential tool in construction accounting, providing a clear and accurate financial picture of ongoing projects. While it offers significant benefits in terms of financial management and decision-making, it also presents challenges that require careful management. CPAs play a vital role in implementing this method effectively, from setting up the necessary systems and providing training to ensuring compliance and assisting with financial reporting. With the right approach and expert guidance, construction companies can leverage this method to enhance their financial stability and project management success.